Central bank president Knot urges Europe to end dependency on US

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The head of the Dutch central bank, Klaas Knot, has urged Europe’s financial community to become less dependent on the United States, arguing that the world’s largest economy is no longer a reliable partner.

Knot said Donald Trump’s trade war, which shook global financial markets in April, had created “unprecedented and historic” uncertainty and should serve as a wake-up call to Europe.

“The US is deliberately sowing doubts about our relationship,” he said as De Nederlandsche Bank (DNB) published its half-yearly report. “We have to ask ourselves questions that we haven’t asked ourselves for 80 years. There is no time to lose.”

Knot gave the example of the Swift mechanism, which banks around the world use to facilitate cross-border payments. “We need to create alternatives,” he said.

Financial institutions also needed to build better safeguards to respond to cyber-attacks from countries such as Russia and China. “We can’t do much about cyber-attacks, but we can make sure our systems are up and running again quickly.”

Knot also voiced concern about the rapprochement between the Trump administration and Vladimir Putin’s Russia, which raises questions about whether US information about cyber threats is reliable.

“Europe and the financial sector are partly dependent on American services for intelligence about cyber threats,” he said.

The economic planning agency CPB produced a similar warning about over-dependency on the US.

In recent decades American governments have kept the world economy ticking over through crises by printing dollars, such as during the coronavirus pandemic, but Trump’s re-election raises questions about whether the US would do the same in a future crisis, the CPB said.

“The good news is that we have sufficient resilence to cope with this,” DNB commented. “The buffers are high enough.”